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Wednesday, May 28, 2008

Belene nuclear power plant could cost double, physicist warns

The cost of building Belene nuclear power plant nuclear could be several billion euro higher than the four billion euro price tag originally announced by the Bulgarian Government, according to Georgi Kastchiev, the physicist who was in charge when the first four units of Kozloduy nuclear power plant were opened.

Kastchiev, speaking at a May 26 news conference, also alleged that consumers would have to front the additional 110 million euro a year cost through their electricity bills in order to serve the loan from BNP Paribas and pay associated charges, according to Bulgarian-language daily Dnevnik.

Kastchiev was also one of the chief scientists who oversaw the opening of the fifth unit. He holds a PhD in reactor physics from Vienna and Tokyo universities and now teaches at Vienna University's department of risk research.

Kastchiev claimed that construction of the new nuclear power plant would cost nine billion euro, while the value of electricity accrued from it would be nine eurocent a kWh. He said the price of four billion euro announced by the constructor, the Russian company Atomstroyexport, was unrealistic. He said that this figure failed to take into account a 16 per cent increase in steel prices and a 12 per cent increase in the price of concrete. It also excluded the cost of two turbo generators, fuel charges and the construction of power transmission lines.

Other experts have also claimed that Belene NPP would be uncompetitive as an electricity supplier in the marketplace at these prices after 2015.

The Bulgarian government’s justification for the construction was that electricity from Belene would be cheap and that construction costs would not increase. According to Kastchiev, however, NEC’s envisaged prices only include the costs of environmental assessment, terrain maintenance and the cost of employing the project’s architect-engineer and financial consultant. Kastchiev also claimed that the cost of repaying bank loans had been excluded from the equation as well as the cost of supplying raw nuclear fuel and returning the processed nuclear fuel to Russia.

According to the MP from the energy commission, Yordan Kostadinov, the higher price envisaged by Kasschiev was out of the question. He told Bulgarian National Radio that Kastchiev was “an exceptional specialist in the field of nuclear safety, but he has never been an economist and never addressed the problems of a nuclear power plant”. The National Electricity Company (NEC) said that Kastchiev needed to provide the evidence to support his statements.

Contacted by The Sofia Echo on May 27, Kastchiev said that it was not enough for the Government to repudiate his forecasts. He said that the Government had to reveal whether the supply of fuel and turbines had already been contracted and, if not, what the price would be. Kastchiev said these were still unknown quantities and he deduced that their respective costs had not been included in the announced future price of electricity from Belene nuclear power plant.

During his presentation, Kastchiev also said that the project had not been properly financed. He said that banks would charge a double-figure interest rate to lend money to such a high-risk project. NEC had already chosen BNP Paribas to structure the project’s finance and the French financial institution has agreed to extend a 250 million euro loan. However, according to Kastchiev, the bank can refuse to provide the funding if its shareholders are against it.

Kastchiev told The Sofia Echo that the government’s energy policy was creating the conditions for unfair competition and the European Commission has to be alarmed about that because it has strict rules concerning competitiveness.

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